music, politics, sports, etcetera

Main menu

Post navigation

Bleeding jobs

This feels like I’m blogging for the first time. Anyway, I picked the most action two weeks since the election to not blog. The list of things I haven’t blogged about – The Obama Inauguartion, the first 10 days, Rod Blagojevich, Rush Limbaugh?

What brings me out of my shell are layoffs. They’re everywhere – hitting very close to home for all of us. One thing that has bothered me is the massive number of layoffs and location closings hitting the news. Starbucks, Circuit City, Home Depot, etc. A few years ago these companies couldn’t find a location they didn’t like. Across the street is another Starbucks? No problem. The growth of these companies during the last 10 years has been dizzying. Their growth has also been foolish.

Here’s the analogy I’ve been using – Say someone bought a lottery ticket and won a thousand dollars. Good right? What if this happened the next month and the month after that? Excellent huh? Here’s the question: What would you say if that person, looking at their recent track record decided that the winnings had to coming month after month, and buys a bigger, nicer home based on the belief that these winnings were coming month after month? You’d think that person was a fool. Well this is essentially what many companies did.

Instead of growing at a sustainable and manageable rate – they grew thinking the good times would never end. Fueled by a low interest rates, cheap money, an insane real estate market, these companies grew without any regard for the future. Shouldn’t companies grow at a rate that allows them to withstand the bad times without upsetting the apple cart? Didn’t these have a responsibility to be there for their employees? But greed won out and all they could think of is more, more, more.

All this is too late – people are losing the jobs, over 100,000 this week. The people in charge should be in jail, but they’re living off of their crazy bonuses. One report had Wall Street bankers taking in $18 billion in bonuses last year. How much is that? Enough to give the automakers the bailout they asked for plus an additional $4 billion to “buy something to make themselves pretty”. It’s enough to employ 300,000 people at $48,000 a year and pay for their health insurance for their family of four. It’s enough to buy every Major League Baseball team and have enough left over to buy 10 or 11 NFL teams. In other words – it’s a lot of money. I don’t want to get on a rant here – but maybe these guys didn’t need a bailout.

I hope this ends soon – I fear that it will bring us all under. But part of me wonders if that pain wouldn’t be good in the end. Maybe the past two hundred years we were the caterpillar (the insect, not the company that has cut 22,000 jobs). Maybe when this is all done, we’ll be a pretty butterfly.

2 thoughts on “Bleeding jobs”

You miss the point of competition, however. Many banks dug themselves deeper holes because their profitability wasn’t as attractive as similar banks who were taking on dangerous lending practices, for example.

In the end, it’s not the companies, but investors who are largely responsible for that. When investors demand performance relative to the competition, at practically any cost, this is the result.

@red – Excellent point. Again there’s a premium placed on what a company can do right now as opposed to what a company can do for you long term. There seems to be a lack of respect for companies that are slow and steady – only growing when it makes sense.